“capital expenditure”

Business ExpensesSection 37Section 373,515 judgments

The decision most relied on for capital expenditure is Empire Jute Co. Ltd. v. CIT (124 ITR 1), cited in 622 judgments on BharatTax.

Leading authorities on capital expenditure

Empire Jute Co. Ltd. v. CIT

124 ITR 1 · 1980 · Supreme Court

622

citing judgments

Expenditure is classified as revenue or capital based on its practical business effect, necessity, or expediency, rather than solely on the juristic classification of rights; an enduring benefit does not automatically make an expenditure capital if it facilitates trading operations or business efficiency.

Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT

227 ITR 172 · 1997 · Supreme Court

621

citing judgments

Interest income earned on deposits, particularly before the commencement of business operations or as a requirement for business licensing, is taxable as "income from other sources" under Section 56, and cannot be treated as business income or set off against interest on borrowed funds.

Madras Industrial Investment Corporation Ltd. v. CIT

225 ITR 802 · 1997 · Supreme Court

568

citing judgments

Expenditure that provides an enduring benefit should be amortized over its useful life, not allowed as a deduction in a single year, to prevent a distorted picture of profits. Specifically, premium paid on debentures for their issue should be amortized on a straight-line method over the life of the debentures.

South Indian Bank Ltd. v. CIT

438 ITR 1 · 2021 · Supreme Court

508

citing judgments

The mixed fund theory is affirmed, holding that no disallowance of interest expenditure under Section 14A can be made if the assessee possesses sufficient non-interest bearing funds, such as capital and reserves, to cover investments made in tax-free securities.

CIT v. Institute of Banking Personnel Selection

264 ITR 110 · 2003 · High Court

398

citing judgments

Depreciation is allowable on assets for which the cost has been fully allowed as an application of income under Section 11 in previous years, when computing the income of a charitable trust. Charitable trusts are also entitled to carry forward their deficit.

Taparia Tools Ltd. v. JCIT

372 ITR 605 · 2015 · Supreme Court

343

citing judgments

An expenditure does not automatically become capital in nature merely because it results in some enduring benefit for the assessee; it can be treated as revenue expenditure if incurred for genuine business purposes.

Biocon Ltd. v. DCIT

35 Taxmann.com 335 · 2013 · ITAT

322

citing judgments

The discount arising from the grant of Employee Stock Option Plans (ESOPs) is an allowable business expenditure under Section 37(1) of the Income-tax Act, 1961, as it is an ascertained liability, not a contingent one, and constitutes a revenue expense rather than a capital expense.

Alembic Chemical Works Co. Ltd. v. CIT

177 ITR 377 · 1989 · Supreme Court

275

citing judgments

Expenditure that provides a commercial advantage of an enduring nature may still be classified as revenue expenditure if its purpose is to facilitate existing trading operations, improve business efficiency, or upgrade existing products, depending on the specific context and objective.

Judgments citing capital expenditure

Genpact Services Llc, Gurgaon vs. Assistant Commissioner of Income Tax Circle - Int Tax 1(3)(1), Delhi

ITA 4477/DEL/2024[2020-21]Status: DisposedITAT Delhi31 Jul 2025AY 2020-21

Bench: Shri Prakash Chand Yadav & Shri Brajesh Kumar Singh

Section 133ASection 143(3)Section 92C

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘H’: NEW DELHI BEFORE SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER AND SHRI

Deputy Commissioner of Income Tax, Central Circle-1(2), Bangalore vs. M/S. Manipal Hospitals (Bangalore) Private Limited, Bengaluru

In the result appeal of the Ld

ITA 959/BANG/2025[2012-13]Status: DisposedITAT Bangalore30 Jul 2025AY 2012-13

Bench: Shri Prashant Maharishi, Hon’Ble & Shri Soundararajan K, Hon’Bledcit – Central Circle – 1(2) Vs. M/S. Manipal Hospitals Room No. 307, 3Rdfloor. (Bangalore) Private Limited C.R. Building, Queens Road 98/2, The Annex Bengaluru – 560001 Ruso Bagh Karnataka Off. Hal Airport Road Bengaluru – 560017 Karnataka Pan: Aaccv9562D (Applicant) (Respondent) Assessee Represented By: Sri S.K. Tulsiyan, Advocate Department Represented By: Smt Prajakta Thakur, Jcit Date Of Hearing:09.07.2025 Date Of Pronouncement 30.07.2025 O R D E R Per Prashant Maharishi: 1. Captioned Appeal Is Filed By Dcit – Central Circle – 1(2), Bengaluru Against The Appellate Order Passed By The Commissioner Of Income Tax (Appeals)-15, Bengaluru (“The Ld.Cit(A)”) Dated 28.02.2025 Wherein The Appeal Filed By The Assessee Against The Penalty Order Dated 25.03.2022 Passed By Dcit – Central

Section 143(3)Section 271(1)(c)Section 37

operative expenditure. Thus, there was a disallowance of this interest income but treated the 7 8 M/s. Manipal Hospitals (Bangalore) Private Limited same as capital expenditure by the Ld. AO which is subject to depreciation. Thus, the penalty was levied because claim of expenditure as revenue expenditure was denied ... treated as capital expenditure. We do not find that the assessee has furnished any inaccurate particulars with respect to the claim of deduction of interest expenditure as revenue expenditure. In fact, it is mere denial of accepting the claim of the assessee whether the expenditure is capital or revenue

M/S. Laxmi Organic Industries Limited, Mumbai vs. Deputy Commissioner of Income Tax Circle 3(2)(1), Mumbai

ITA 4782/MUM/2024[2020-21]Status: DisposedITAT Mumbai25 Jul 2025AY 2020-21

Bench: Shri Pawan Singh & Shri Girish Agrawal

For Appellant: Shri Percy Pardiwala, Sr. Advocate andFor Respondent: Ms. Neena Jeph, CIT DR

Section 144C(5)Section 80I

case, the appellant is eligible to claim deduction @100% for revenue expenditure u/s 35(1)(i) and @100% for capital expenditure u/s 35(1)(iv). 10. On the facts and in the circumstances of the case and in law, the learned Assessing Officer erred in completing the assessment without considering

Assistant Commissioner of Income Tax, Circle 2(1)(1), Vadodara, Race Course vs. Unimed Technologies Limited, Halol

ITA 632/AHD/2024[2016-17]Status: DisposedITAT Ahmedabad24 Jul 2025AY 2016-17

Bench: S/Shri T.R. Senthil Kumar & Makarand V.Mahadeokar

For Appellant: Shri Bandish Soparkar, ARFor Respondent: Shri Sher Singh, CIT-DR

Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 234BSection 250Section 271(1)(b)Section 271(1)(c)Section 36(1)(iii)Section 37(1)

view that the said expenditure conferred an enduring benefit to the assessee and therefore fell within the nature of capital expenditure not allowable under section 37(1) of the Act. The CIT(A) also confirmed the disallowance of foreign exchange fluctuation loss to the extent of Rs.2 ... finding that, in the absence of any positive material brought on record by the Assessing Officer to demonstrate a nexus between borrowed funds and capital expenditure, the notional allocation of interest was unsustainable in law. The CIT(A) further held that, where both interest-free own funds and borrowed funds

Unimed Technologies Limited, Panchmahal vs. The ACIT, Circle-2(1)(1), Vadodara

ITA 623/AHD/2024[2016-17]Status: DisposedITAT Ahmedabad24 Jul 2025AY 2016-17

Bench: S/Shri T.R. Senthil Kumar & Makarand V.Mahadeokarasstt.Year : 2016-17 Unimed Technologies Limited Acit, Cir.2(1)(1) Survey No.22 & 22, Vs. Vadodara. Baska, Ujeti Halol Panchmahal Pan : Aaace 4022 B Asstt.Year : 2016-17 Acit, Cir.2(1)(1) Unimed Technologies Limited Vadodara. Vs. Survey No.22 & 22, Baska, Ujeti Halol Panchmahal Pan : Aaace 4022 B (Applicant) (Responent) : Shri Bandish Soparkar, Ar Assessee By : Shri Sher Singh, Cit-Dr Revenue By सुनवाई क" तारीख/Date Of Hearing : 17/07/2025 घोषणा क" तारीख /Date Of Pronouncement: 24/07/2025 आदेश आदेश/O R D E R आदेश आदेश

For Appellant: Shri Sher Singh, CIT-DR

Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 234BSection 250Section 271(1)(b)Section 271(1)(c)Section 36(1)(iii)Section 37(1)

view that the said ITA No.623 and 632/Ahd/2024 4 expenditure conferred an enduring benefit to the assessee and therefore fell within the nature of capital expenditure not allowable under section 37(1) of the Act. The CIT(A) also confirmed the disallowance of foreign exchange fluctuation loss to the extent ... finding that, in the absence of any positive material brought on record by the Assessing Officer to demonstrate a nexus between borrowed funds and capital expenditure, the notional allocation of interest was unsustainable in law. The CIT(A) further held that, where both interest-free own funds and borrowed funds

Mahadhan Agritech Limited (Formerly Known As Smartchem Technologies Ltd), Mumbai vs. Assistant Commissioner of Income Tax Central Circle 8(1), Mumbai

In the result, the appeals filed by the assessee are

ITA 5423/MUM/2024[2020-21]Status: DisposedITAT Mumbai24 Jul 2025AY 2020-21

Section 115JSection 132Section 143(3)Section 153ASection 69A

taken herein above, the Ld CIT (Appeals) was not justified and grossly erred in confirming additions made u/s 69A of alleged inflated capital expenditure without appreciating the fact that no incriminating material had been found referable to the assessment year under consideration, during the course of search & seizure carried ... Appeals) was not justified and grossly erred in confirming the additions of undisclosed income us 69A on account of alleged inflated capital expenditure while 4 ITA No.2227/Mum/2024 and others Mahadhan Agritech Limited computing total income under the normal provisions of the Act. Ground 4 - That on the facts

Avitel Post Studioz Limited, Mumbai vs. Deputy Commissioner of Income Tax, Circle 6(1)(2), Mumbai

ITA 5242/MUM/2024[2012-13]Status: DisposedITAT Mumbai24 Jul 2025AY 2012-13

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 143(3)Section 148Section 37(1)

Since the only investor was HSBC and the funds raised were in the nature of capital, the AO disallowed the amount holding it as capital expenditure. Payment to Nishith Desai & Associates – Rs.8,97,458/- (vi) This amount was claimed to be legal fees pertaining to a litigation issue with ... expenditures relating to bonds or convertible instruments, which involved debt financing. In contrast, the assessee’s expenditure pertained to raising equity capital, which constitutes capital expenditure. Thus, the reliance was held to be misplaced. 8. Thus, the ld. AO held that the entire legal and professional expenditure of Rs.1

Mahadhan Agritech Limited (Formerly Known As Smartchem Technologies Limited ), Mumbai vs. Deputy Commissioner of Income Tax, Central Circle -8(1), Mumbai

In the result, the appeals filed by the assessee are allowed, and the appeal filed by the Revenue is dismissed

ITA 3937/MUM/2024[2019-20]Status: DisposedITAT Mumbai24 Jul 2025AY 2019-20

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 115JSection 132Section 143(3)Section 153ASection 69A

taken herein above, the Ld CIT (Appeals) was not justified and grossly erred in confirming additions made u/s 69A of alleged inflated capital expenditure without appreciating the fact that no incriminating material had been found referable to the assessment year under consideration, during the course of search & seizure carried ... Appeals) was not justified and grossly erred in confirming the additions of undisclosed income us 69A on account of alleged inflated capital expenditure while Act. Ground 4 - That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred in confirming

DCIT Central Circle 8(1), Mumbai vs. Mahadhan Agritech Limited, Pune

In the result, the appeals filed by the assessee are allowed, and the appeal filed by the Revenue is dismissed

ITA 3569/MUM/2024[2019-20]Status: DisposedITAT Mumbai24 Jul 2025AY 2019-20

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 115JSection 132Section 143(3)Section 153ASection 69A

taken herein above, the Ld CIT (Appeals) was not justified and grossly erred in confirming additions made u/s 69A of alleged inflated capital expenditure without appreciating the fact that no incriminating material had been found referable to the assessment year under consideration, during the course of search & seizure carried ... Appeals) was not justified and grossly erred in confirming the additions of undisclosed income us 69A on account of alleged inflated capital expenditure while Act. Ground 4 - That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred in confirming

Mahadhan Agritech Limited (Formerly Known As Smartchem Technologies Ltd, Mumbai vs. Commissioner of Income Tax(Appeal)--50, Mumai

In the result, the appeals filed by the assessee are allowed, and the appeal filed by the Revenue is dismissed

ITA 2229/MUM/2024[2018-19]Status: DisposedITAT Mumbai24 Jul 2025AY 2018-19

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 115JSection 132Section 143(3)Section 153ASection 69A

taken herein above, the Ld CIT (Appeals) was not justified and grossly erred in confirming additions made u/s 69A of alleged inflated capital expenditure without appreciating the fact that no incriminating material had been found referable to the assessment year under consideration, during the course of search & seizure carried ... Appeals) was not justified and grossly erred in confirming the additions of undisclosed income us 69A on account of alleged inflated capital expenditure while Act. Ground 4 - That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred in confirming

Mahadhan Agritech Limited (Formerly Knwon As Smartech Technologies Ltd ), Mumbai vs. Commissioner of Income Tax (Appeals)-Mumbai-50, Mumbai

In the result, the appeals filed by the assessee are

ITA 2228/MUM/2024[2016-17]Status: DisposedITAT Mumbai24 Jul 2025AY 2016-17

Section 115JSection 132Section 143(3)Section 153ASection 69A

taken herein above, the Ld CIT (Appeals) was not justified and grossly erred in confirming additions made u/s 69A of alleged inflated capital expenditure without appreciating the fact that no incriminating material had been found referable to the assessment year under consideration, during the course of search & seizure carried ... Appeals) was not justified and grossly erred in confirming the additions of undisclosed income us 69A on account of alleged inflated capital expenditure while ITA No.2227/Mum/2024 and others Mahadhan Agritech Limited 4 computing total income under the normal provisions of the Act. Ground 4 - That on the facts

Mahadhan Agritech Limited (Formerly Known As Smartech Technologies Ltd, Mumbai vs. Commissioner of Income Tax (Appeals)-Mumbai.50, Mumbai

In the result, the appeals filed by the assessee are allowed, and the appeal filed by the Revenue is dismissed

ITA 2227/MUM/2024[2017-18]Status: DisposedITAT Mumbai24 Jul 2025AY 2017-18

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 115JSection 132Section 143(3)Section 153ASection 69A

taken herein above, the Ld CIT (Appeals) was not justified and grossly erred in confirming additions made u/s 69A of alleged inflated capital expenditure without appreciating the fact that no incriminating material had been found referable to the assessment year under consideration, during the course of search & seizure carried ... Appeals) was not justified and grossly erred in confirming the additions of undisclosed income us 69A on account of alleged inflated capital expenditure while Act. Ground 4 - That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred in confirming

Income Tax Officer 3(2)(1), Mumbai vs. Manas Agro Industries and Infrastructure Limited, Mumbai

In the result, the appeal of the revenue bearing ITA 1710/Mum/2024 is dismissed

ITA 1710/MUM/2024[2016-17]Status: DisposedITAT Mumbai24 Jul 2025AY 2016-17

Bench: Shri Narendra Kumar Billaiya, Account Member & Shri Anikesh Banerjeeincome-Tax Officer 3(2)(1), Vs Manas Agro Industries & Mumbai, Infrastructure Limited, 6Th Unit No.605, 6Th Floor, Raheja 673A, Floor, Aayakar Bhavan, Mumbai-400 020 Chambers, Nariman Point, Mumbai-400 021 Pan: Aaccf0662N Appellant Respondent

For Appellant: Shri Hitesh Shah (virtually appeared)For Respondent: Shri Leyaqat Ali Aafaqui – Sr.AR

Section 115JSection 143(3)Section 250Section 35D

which was debited in the P&L Account as legal expenses and consultancy charges. The Ld.AO treated this amount as a capital expenditure, so entire expenses were duly disallowed and added back with the total income of the assesse. Further, the addition was made related to re-computation under section

DCIT-5(2)(2), Mumbai vs. M/S Vodafone Idea Ltd., Mumbai

In the result, the ground no

ITA 2987/MUM/2019[2015-16]Status: DisposedITAT Mumbai24 Jul 2025AY 2015-16

Bench: Ms. Kavitha Rajagopal, Jm & Smt. Renu Jauhri, Am

Section 194Section 250Section 40Section 9(1)(vi)

declared as a one time licence fee as stated in the communication dated 22 July, 1999 which was treated to be a capital expenditure. The licence granted under the Policy of 1999 was non-transferable and non-assignable. More importantly, if there was a default in the payment ... various High Courts, issue now has reached finality by the decision of the Hon'ble Apex Court holding the same to be a capital expenditure which is to be amortized u/s. 35ABB of the Act. By respectfully following the Hon'ble Apex Court, we hereby restore this issue back